Bonds are sold at face value when the contract rate is equal to the market rate of interest.

Name: Bonds are sold at face value when the contract rate is equal to the market rate of interest.
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Question

Quizplus · Accepted Answer

When the contract rate (also known as the coupon rate) of a bond is equal to the market rate of interest, investors are indifferent between buying the bond at face value or buying it on the secondary market. Therefore, the bond will be sold at face value.

Bonds Are Sold at Face Value When the Contract Rate